What just happened? SpaceX CEO Elon Musk says that the company has now changed its state of incorporation from Delaware to Texas. The move comes soon after a judge in Delaware voided Musk’s $56 billion Tesla compensation package, leading to his X/Twitter post advising people never to incorporate companies in the state.
Musk’s reputation for holding a grudge was evident after Delaware Judge Kathaleen St. J. McCormick in January agreed with Tesla shareholder Richard Tornetta’s lawsuit that claimed Tesla breached its fiduciary duty by unjustly enriching its CEO to the tune of $56 billion. Musk is expected to file an appeal to the Delaware State Supreme Court.
Musk’s first response to the ruling was an X post suggesting founders never incorporate companies in Delaware, opting for Nevada or Texas if “you prefer shareholders to decide matters.”
The billionaire followed up with a poll asking if he should change Tesla’s state of incorporation to Texas, home of the company’s physical headquarters. After 1.1 million people participated, the final outcome was 87.1% in favor of the move. Musk later confirmed that Tesla would be immediately moving to hold a shareholder vote to transfer its state of incorporation to Texas.
Musk began the process of switching the incorporation of his brain-chip implant firm Neuralink from Delaware to Nevada last week. Now, SpaceX, which has its headquarters in Southern California, is joining the exodus from Delaware, which has long been a favored state of incorporation for many companies.
“SpaceX has moved its state of incorporation from Delaware to Texas!” Musk wrote in a post on X on Wednesday. “If your company is still incorporated in Delaware, I recommend moving to another state as soon as possible.”
SpaceX has moved its state of incorporation from Delaware to Texas!
If your company is still incorporated in Delaware, I recommend moving to another state as soon as possible. pic.twitter.com/B7FLByL2dY
– Elon Musk (@elonmusk) February 15, 2024
Musk was moving companies out of Delaware even before the Tesla pay-package ruling. After he succeeded in his protracted battle to acquire Twitter in 2022, he moved its state of incorporation to Nevada. His recently revealed artificial intelligence company, xAI, was also incorporated in Nevada back in March last year.
Musk was recently voted the most-overrated CEO in a Fortune survey in which hundreds of CEOs were asked to rank their peers in terms of who is most overrated and who doesn’t get enough credit. Musk took the unwanted title for the second year in a row, while Microsoft boss Satya Nadella was voted most underrated for the eighth year running.
